HOT Lanes Are Even More Popular When They're Expensive

Everyday, sometimes twice a day, commuters in the increasing number of U.S. metro areas with a HOT lane ask themselves that timeless question: to pay, or not to pay. How they answer depends on the toll price, which charges single-occupancy cars for HOT access based on congestion levels. Logic suggests that as the toll goes up, fewer drivers would fork over the money — for the same reason we sit coach on a plane once we see the price of first-class.

But in Minnesota, at least, HOT lane prices are having the opposite effect. As the cost of HOT lanes on Interstates 394 and 35 went up, more commuters were willing to pay the toll. That's the rather counter-intuitive finding that emerges from recent research by Michael Janson and David Levinson of the University of Minnesota [PDF]:

This positive relationship between price and demand is in contrast with the previously held belief that raising the price would discourage demand.

Janson and Levinson reached their conclusion by studying two years of toll and traffic data on the MnPASS HOT lanes along the I-394 and I-35 corridors. They also conducted a series of experimental price manipulations on the highways — unbeknownst to the public — during which the tolls became higher or lower than usual. The point here was to compare commuter responses during the modified period to normal driving behavior.

Altogether, this data told the researchers that more drivers chose HOT lanes when tolls were high, and conversely that fewer drivers made the switch when tolls were low. (The MnPASS tolls range from a quarter to $8.)

But why would costly tolls be popular tolls? Well, Janson and Levinson think that the HOT price may be serving as a proxy for congestion. Since the HOT lanes in Minnesota (and elsewhere) only show drivers the toll charge, as opposed to how much traffic is ahead, drivers may have come to see the toll as "a signal of downstream congestion."

That's a pretty creative solution to the problem of limited information. Thing is, it might not be an accurate one. In fact, the price of HOT lanes may not be a reliable signal of traffic levels at all. For all the money spent on tolls during the period studied by Janson and Levinson, drivers only saved between 1 and 3 minutes on the MnPASS HOT lanes, which run for about 12 miles on I-394 and 16 on I-35:

MnPASS users probably do not realize how minimal their time savings is on average.

The disconnect between toll-cost and time-saved is pretty extreme. While the Minnesota Department of Transportation expects people to place the value of saving an hour of time at $15, the drivers studied by Janson and Levinson paid the equivalent of $60 to $120 an hour. And this situation isn't unique to Minnesota: in metro Seattle, on the SR-167 HOT lanes, drivers are paying on the order of $22 to save an hour, even though they express a willingness to pay only $9.

In other words, one reason HOT lane drivers might be willing to pay such high tolls is that they think they're saving more time in traffic than they actually are.

If that's the case, DOTs that implement HOT lanes might expect people to make this realization over time and reduce their willingness to pay. But there are other explanations for this strange tendency to pay more for higher tolls that could mean the trend is here to stay. HOT lane drivers may simply place a higher value on their time than the population at large. An even more tempting reason is that they place a very high premium on the reliability of their commute.

In that sense, the basic question faced by HOT lane drivers every day — to pay or not to pay — may in fact be replacing a far more difficult one: when do I have to leave the house to be on time for work?